Ace Computing Company on January 1, Year 1, the Accounts Receivable and the Receivable

question 16

Multiple Choice

Ace Computing Company
On January 1, Year 1, the accounts receivable and the allowance for doubtful accounts carried balances of $40,000 and $1,500 respectively. During the year, the company reported $80,000 of credit sales. There were receivables of $500 written off as uncollected in Year 1. Cash collections of receivables amounted to $78,200. The company estimates that it will be unable to collect 4% of the year-end accounts receivable balance.
-Refer to the figure Ace Computing Company.What will be the impact of the entry required to recognize the bad debts expense for Year 1?

• A) Total assets and retained earnings increase.
• B) Total assets and retained earnings decrease.
• C) Total assets decrease and net income increases.
• D) Total assets increase and net income decreases.

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Definitions:

Cerebral Hemispheres

The two halves of the brain, each controlling the opposite side of the body and divided into lobes with specialized functions.

Cerebellum

A part of the brain located at the back and beneath the cerebrum, responsible for coordination of voluntary movements and balance.

Persuasive Messages

Communications designed to convince or influence the audience to adopt a certain point of view or take a specific action.

Purchasing Process

A series of steps followed by an organization or individual to acquire goods or services, including selection, ordering, and payment.